ResiFund Founder & Director Matthew Lewison talks about ResiFund activity over the last quarter, the pick-up in property prices and the fund's 10% return from its Melbourne and Brisbane portfolio.
Ortenzia Borre: Hello. I'm Ortenzia Borre for the Finance News Network. And joining me today is ResiFund Director Matthew Lewison. Matthew, welcome to FNN.
Matthew Lewison: Thanks Ortenzia. It's lovely to be here.
Ortenzia Borre: Matthew, can you remind us, ResiFund, its aims and where it invests.
Matthew Lewison: So our top priority is to give investors accessibility to the residential market through a diversified portfolio of residential properties. So, we're investing around Australia's major capital cities, and we're aiming to achieve 10% prime returns through a mixture of income and capital growth. So, investors who invest in ResiFund get a share of the overall portfolio and the rental income that's derived from that, as well as a share of the capital growth as the market goes up in value.
Ortenzia Borre: Thanks Matt. Now to the fund, how is the fund performing?
Matthew Lewison: So in our first year of operations, since 31 March 2019, we're on track to exceed 10% per annum return. So, we're beating our forecast in the first year, which is great. Obviously, the start of that year was a challenging market. So, we were able to get into the market and start to generate capital growth for our investors and we're on track to exceed the market's growth for that period of time -- which really, I guess, attests to our acquisition strategy and our focus on finding properties that are going to go up in value despite sometimes uncertain market conditions.
Ortenzia Borre: Can you talk me through your type of properties?
Matthew Lewison: Yes, we buy residential properties, and we generally buy and build purpose-built residential properties to suit the type of accommodation that we want to provide, and that will be across the whole broad range of residential properties. And that obviously ties into the diversification that we're aiming to achieve for our investors, not only by geographic location, but also by property type and tenant type as well. And we're really focused on high-yielding assets, so properties that are going to generate 6 to 7% per annum rental returns, on a gross basis, for the investors of the fund.
Ortenzia Borre: And fund features?
Matthew Lewison: We allow investors to participate from as little as $1,000 initial investment for retail investors. And for wholesale investors that are looking to invest $100,000 or more, they also get additional liquidity opportunities through our residential wholesale units for the fund. We also aim to provide our 10% return by achieving a 5% per annum net income return, plus 5% capital growth. We have very low gearing, so sub 50% loan to value ratio across our portfolio. So we really want to achieve a high return with a low risk for our investors.
Ortenzia Borre: Thanks Matt. Now, property markets have been strong over the last quarter. What's driving the growth and the outlook?
Matthew Lewison: Yeah, so Australia's residential property market is really underpinned by an undersupply of housing, and that's really evident in the rental accommodation space. Affordable rents have been going up at a much faster pace than other rents across Australia. So, we're seeing that people are being priced out of the rental market because of that undersupply. And that's obviously on the one hand great for investors because it means that rents are improving. Obviously also, when there's an undersupply of rental accommodation, more first-home buyers are trying to enter into the market and we're seeing those first-home buyers starting to push up prices as well. So, we've got a really active investor market again in Australia, and an active first-home buyer market, and on top of that people are really confident about the market at the moment as well. So, we're seeing prices being pulled up from the top as well.
Ortenzia Borre: Thanks Matt. Now, for investors interested in the fund, how do they find out more?
Matthew Lewison: The best place to start is obviously our website, www.resifund.com.au. They can also call our office, and we can then provide some information through our Product Disclosure Statement and also any other information that they are seeking to understand the fund in more detail.
Ortenzia Borre: Thanks for the update, Matt, and congratulations on the strong start.
Matthew Lewison: Oh, thank you very much.